Ukrainian President Volodymyr Zelensky said his country and Japan had signed a 10-year agreement providing Kyiv with financing, security, defence and humanitarian assistance.
US Treasury Secretary Janet Yellen said she was most concerned about smaller Chinese banks doing business with Russia, even as she didn’t rule out sanctioning a bigger lender if it engaged in “systematic violations” of sanctions against the Kremlin.
The Pentagon renewed a contract with Elon Musk’s SpaceX to provide Starlink internet services in Ukraine for another six months, a fresh sign that the two sides have moved past a dispute over how the terminals were being used in the conflict zone.
Ukraine, Japan sign 10-year security agreement
Ukrainian President Volodymyr Zelensky said his country and Japan had signed an agreement providing Kyiv with financing, security, defence and humanitarian assistance.
The 10-year pact also encompasses reconstruction and recovery cooperation, Zelensky said in a post on the social media platform X. Japan would provide Ukraine with $4.5-billion this year, he said.
Smaller Chinese banks may not be adhering to Russian sanctions - Yellen
US Treasury Secretary Janet Yellen said she was most concerned about smaller Chinese banks doing business with Russia, even as she didn’t rule out sanctioning a bigger lender if it engaged in “systematic violations” of sanctions against the Kremlin.
“I think the large banks in China really, really value their correspondent-banking relations, and those are not banks that we most need to worry about,” Yellen told reporters in New York. “It’s smaller banks” that are of more concern, she suggested — though even there, “some of those banks also want to be able to process payments in dollars, do not want to be cut off from the US financial system”, she said.
Her comments came just a couple of months after the Treasury chief first warned China during a visit to Beijing that its financial institutions could face sanctions if they facilitated trade with Russia that bolstered Moscow’s military capabilities.
While Yellen stressed that China’s largest financial institutions had a very strong motive not to be designated, she left the door open to sanctioning them if they were found to systematically skirt US sanctions against Russia.
“I’m certainly not going to say that you would not be willing to designate a large bank if we saw systematic violations,” she said.
Such a step would represent a significant escalation — and potential provocation towards Beijing — of the Biden administration’s willingness to use the US dollar as a weapon in its efforts to hobble Russia’s fight in Ukraine.
Sanctions can cripple any bank whose customers rely on that institution for access to US dollars.
Pentagon deal with Musk’s Starlink in Ukraine extended six months for $14m
The Pentagon renewed a contract with Elon Musk’s SpaceX to provide Starlink internet services in Ukraine for another six months, a fresh sign that the two sides have moved past a dispute over how the terminals were being used in the conflict zone.
US Space Force had extended a contract with SpaceX until 30 November for $14.1-million, Space Systems Command spokesperson Bonnie Poindexter said. “The contract provides access to the Starlink constellation, hardware, and customer support under negotiated terms and conditions,” she said.
US military officials have praised the portable Starlink terminals, which provide high-speed broadband internet connections for critical military communications as well as the civilian population, since Russia’s February 2022 invasion. Ukraine said later that year that it had received 10,000 Starlink terminals.
But the arrangement made Musk, one of the world’s richest men, uneasy. In 2022, he threatened to cut financial support for Starlink in Ukraine, saying his company couldn’t carry the costs indefinitely. He also said the terminals weren’t intended for military use and said in a tweet last year “we will not enable escalation of conflict that may lead to WW3.”
Around the same time, Musk irked the Biden administration by offering a peace proposal that would cede Crimea to Russia and redo elections in areas of Ukraine taken over by Russia. The tension also raised questions about the Pentagon’s growing reliance on SpaceX to launch some of its most sensitive military satellites.
The Pentagon later signed a $23-million contract with SpaceX in 2023 to pay for the terminals, and relations have gradually improved. That original contract rose to $26.4-million, and defence officials are even working with SpaceX to blunt Russia’s unauthorised use of the terminals on the battlefield.
Russia warned to stop meddling in Moldova election
The US, UK and Canada accused Russia of interfering in Moldova’s presidential election by trying to put a pro-Kremlin candidate in office and block the country’s bid to join the European Union.
The three Western governments also warned that Russia would attempt to incite riots in Moldova if the plan failed. They called on Moscow to abandon its efforts and respect Moldova’s sovereignty.
“The Kremlin relies on lies, deceit, corruption and disinformation to undermine sovereignty and democracy,” according to a joint statement released on Thursday, during the Group of Seven leaders summit in Italy.
Russia was “currently supporting candidates for Moldova’s presidency and is exacerbating societal tensions,” the statement said. “These Russian actors are actively using disinformation and propaganda online, on the air, and on the streets to further their objectives.”
Read more: Moldova’s pro-Russia parties gather in Moscow to plot strategy
Moldova will hold a presidential election and a referendum on joining the EU on 20 October. Both votes are decisive for the country, a former Soviet republic wedged between Ukraine and Romania, as Russia is trying to bring it back into its sphere of influence.
President Maia Sandu, who is seeking a second term, has denounced Russia’s invasion of Ukraine and charted a clear course for her country to join the EU. The formal accession talks are expected to start soon.
Sandu and other government officials have repeatedly warned Russia is attempting to sabotage or influence the votes. On Wednesday, the US sanctioned Evghenia Gutul, the leader of the autonomous Moldovan region of Gagauzia, for her ties with Russian President Vladimir Putin.
The US, UK and Canada said they shared Sandu’s concerns about the Kremlin’s use of “criminal groups to finance political activities and undermine Moldova’s democratic institutions.
“Part of these operations would include spreading lies about the incumbent president’s character and intentions, and about supposed electoral irregularities,” the statement said. “If Russia’s election meddling proves unsuccessful in Moldova, there is reason to believe Moscow will work to incite protests.”
UK puts first sanctions on Russia’s shadow fleet of oil tankers
The UK announced wide-ranging sanctions on Russia, including a first attempt to clamp down on a shadow fleet of tankers transporting the Kremlin’s oil and a key Moscow-based insurance company.
The measures target four oil tankers out of a fleet of hundreds that are helping Russia to evade Western sanctions, as well as Ingosstrakh Insurance, an important provider of cover against risks including oil spills and collisions, the UK government said in a statement. In total, 50 entities and individuals, from a wide range of industries were identified.
Restrictions on the shadow fleet are significant as they represent an effort to combat a trade that’s increasingly moved out of Western jurisdictions and helped to fund the war in Ukraine. The UN’s shipping watchdog has expressed concern about the fleet’s growth and its involvement in cargo transfers on the high seas. However, it remains to be seen how effective sanctions will prove.
Some Russian ships that were previously sanctioned by the US have struggled to trade as normal after their designation. This will test whether British measures can have a similar effect. Other sanctioned countries, like Iran and Venezuela, have used shadow vessels to try and sustain their oil exports for years.
Many of the sanctions published on Wednesday follow similar moves by the US and upcoming European Union restrictions. The UK said the steps were taken in coordination with other Group of Seven nations. The EU has proposed sanctioning about a dozen ships, Bloomberg previously reported.
Sanctions against Ingosstrakh are notable because it is a major provider of coverage for the commercial fleet moving Russian oil, largely displacing insurers based in the UK and Europe. The company didn’t immediately respond to a request for a comment on how the sanctions may affect its future operations.
In addition to measures against the country’s oil exports, there were restrictions targeting the liquefied natural gas (LNG) sector.
The UK authorities sanctioned an LNG project in Murmansk that’s due to be built by Novatek and a facility that the company has at the Arctic port to make large-scale LNG equipment. The plant was sanctioned by the US on Wednesday. Novatek had been aiming to start construction of the facility in August, and production three years later.
RusChemAlliance, the operator of a planned LNG and gas processing complex in the Baltic port of Ust-Luga, was also sanctioned.
The measures also target the Moscow Stock Exchange, in coordination with the US, as well as suppliers of munitions, machine tools and logistics to Russia’s military, including entities based in China, Israel, Kyrgyzstan and Turkey, along with ships which transport military goods from North Korea to Russia.
Russians see little fallout after US sanctions hit dollar exchange trade
The latest round of US sanctions effectively ended three decades of daily exchange trading in the dollar for Russia’s rouble that first began in the twilight of the Soviet Union. Russians mostly took the news in their stride.
The Moscow Exchange from Thursday halted trading on several markets involving dollars and euros after the company, also known as Moex, was targeted along with its settlement depository unit under US restrictions aimed at further isolating Moscow from the international financial system over its war in Ukraine. The UK followed the US with sanctions on the exchange.
The Bank of Russia said transactions with those currencies would still be available over-the-counter, and that it would use data to set the rouble’s exchange rates for those pairs, implementing solutions it had been long preparing. On Thursday, the central bank said that interbank rates hadn’t deviated from the market in a significant way, confirming OTC data could determine current exchange rates in domestic markets.
The bank also set the official rouble-dollar rate for Friday at 88.2080, little changed from the previous day.
Still, the changes are likely to lead to increased costs for market participants due to higher commissions and wider bid-ask spreads as well as unfavourable exchange rate fluctuations. The moves have also left many wondering how well the exchange rates will work, and how much costs will increase. DM